Is the quality of healthcare affected by the cost?

If a medical procedure costs more at Facility A than it does at Facility B, that means the quality of healthcare is better, right? Not exactly. It’s a good question, though. Many people are unclear about the relationship between the cost and quality of healthcare in the United States — experts included.

One of the reasons this topic seems complicated is because the U.S. spends more on healthcare than the rest of the world but Americans are not any healthier, nor do they live longer, than citizens in other industrialized nations. If cost and quality of healthcare went hand in hand, Americans would be a lot healthier than they are.

So, how are cost and quality related in healthcare? Put simply, they’re not. The cost of healthcare is driven largely by economic factors such as inflation, recession, wars, and government policies. On the other hand, there are quality driven factors in healthcare such as provider competency (skills and training), satisfaction (work-life balance), and the availability of resources. None of these quality factors have any impact on the cost of medical procedures.

Below, you’ll find out why some medical procedure prices are so high, whether a higher price tag means better care, and how to make sure you’re getting a fair price for healthcare.

What determines the cost of a medical procedure?

There’s no universal formula for how much a medical procedure costs. Every single type of procedure, as well as the circumstances of the person receiving it, is different. However, there are certain factors that can impact the cost of healthcare. These include:

Whether the doctor or facility you go to is in- or out-of-network

The term “in-network” refers to a doctor or healthcare facility that has negotiated a discounted rate with your insurance company. When you get in-network care, you often pay a lot less than you would for out-of-network care. Your insurance company may still cover some of the cost of out-of-network care but you’ll be stuck with the majority of the bill.

The cost of a medical procedure can fluctuate greatly just based on whether the doctor or hospital you go to is in your insurance network or not. If you don’t have health insurance, you can expect to pay for the cost of care completely out-of-pocket, obviously making your cost much higher.

The type of doctor you see

If you see a specialist, your medical procedure will likely cost more than if you were treated by your regular doctor. The type of doctor you see — and whether they’re contracted with your insurance company — plays a big role in the total cost of care.

Which type of facility you go to

Many medical procedures that are done at a hospital can also be done (for a much lower price) at an ambulatory surgery center or outpatient clinic. The reason these alternative facilities tend to cost less is that they don’t require as much money to operate as large hospitals do. Don’t worry, though — surgery centers are just as well equipped as a hospital.

The state in which you receive care

In some states, healthcare just costs more. Medical procedures in states like New York and California tend to come with a higher price tag. However, this doesn’t necessarily have to do with socioeconomic factors. According to a RAND Corporation study, “quality is similar in cities with higher and lower rates of those without insurance, poverty, penetration of managed care, and supply of hospital beds and doctors.” This is where traveling for a medical procedure can help save your wallet.

Your insurance co-pay, deductible, and co-insurance

Every health plan is different when it comes to the co-pay, deductible, and co-insurance amounts. If you’re not familiar, here’s a quick overview of what these costs are:

A co-pay is the fixed amount you pay for a healthcare service. The amount can vary depending on whether you’re seeing a primary care provider, a specialist, or having a prescription filled. Co-pays can be charged both before and after you’ve met your deductible.

A deductible is an amount you must pay for healthcare before your insurance kicks in and starts paying.

Co-insurance is the amount you pay for healthcare after you’ve met your deductible. Your insurance has already started to pay at this point, so you’re only responsible for the set co-insurance percentage determined by your health plan (as well as any co-pays).

Of course, these costs affect the price you pay out-of-pocket or with an HSA, not necessarily how much a procedure actually costs. Still, it’s a good idea to have a basic understanding of the costs you’ll be responsible for.

Is the quality of healthcare affected by the cost?

The reality is, no, a more expensive medical bill doesn’t mean you got better care. The cost and quality of healthcare are, in general, unrelated.

There are a lot of reasons healthcare costs become inflated — over-reliance on emergency room care, chronic disease, and government policies, to name just a few. None of these correlate to higher quality care, better patient outcomes, or more patient satisfaction. Instead, they just point to a healthcare system with a lot of fundamental problems, one of those being the cost of care.

That brings us to an important question: if you can’t look to the price of a medical procedure to determine whether you’ll receive quality care, what can you do?

How to accurately measure the quality of care

There are several metrics that can be used to determine the quality of healthcare. Healthcare policy makers encourage doctors to focus on value-based care (in other words, making sure they spend enough time with each patient, treat their medical concern accurately and effectively, and provide a good overall experience). Healthcare consumers can use similar metrics to determine whether a doctor or facility will provide them with high-quality care.

Which metrics can be used to determine the quality of care?

Qualifications of the doctor/surgeon — If you compare costs without comparing qualifications, you’re not alone. Many people don’t even think to look into the qualifications of their doctor. To make sure you’re receiving high-quality care, check to find out if your doctor or surgeon is board certified (you can do that here).

Accreditation of the healthcare facility — Whether you get a medical procedure at a hospital or a standalone surgery center, it’s smart to make sure they’re accredited. Hospitals should be accredited by the Joint Commission on Accreditation of Healthcare Organizations (JCAHO). If you’re being treated at an ambulatory or outpatient surgery center, you can check to see if the center has been accredited by the Joint Commission or the Accreditation Association for Ambulatory Health Care. These accreditations are not necessary for a healthcare facility to operate but when they’ve voluntarily sought accreditation, it’s a good sign that they’re committed to providing high-quality care.

Readmission and mortality rates — Readmission to the hospital (or another type of healthcare facility) can happen for a number of reasons. Regardless of if a surgeon or hospital is specifically at fault, high readmission rates are not a good sign. Likewise, death (mortality) rates are a very bad sign. Of course, there are some cases in which a doctor or hospital is not at fault and nothing could be done, such as due to underlying health conditions. However, it’s a good idea to ask for them to share both readmission and mortality rates for any medical procedure you’re considering — before you have it done.

Patient satisfaction — Last but certainly not least, patient satisfaction is one of the most helpful measures of quality in healthcare. The amount of time you spend being actively treated for a medical condition is relatively small in comparison to how much time you’ll spend interacting with staff, planning for your procedure, and engaging in your recovery. Hearing from other patients about their experience at every step can clue you into the level of quality you can expect.

What does the lack of correlation between cost and quality of healthcare mean for you?

When you’re buying cereal, a higher price tag may mean better ingredients. When you’re paying for a medical procedure, a higher price tag doesn’t necessarily mean anything at all. There are many ways to determine the quality of care but cost just isn’t one of them.

Still, the cost of healthcare is a concern for many people. Whether you have a high deductible health plan or no insurance at all, it’s understandable to want more transparency around how much you’ll pay for care.

The lack of connection between cost and quality of healthcare means that you can rest easy knowing you don’t have to wipe out your savings account to pay for a medical procedure. Instead of focusing on cost, you can compare surgeons and facilities based on the quality measures listed above.